Interest Only Mortgages Explained

This is a mortgage where the principal loan is only repaid at the end of the loan term. During the term of the mortgage, only the interest is repaid.

• In most instances this type of mortgage is short term between 1 to 5 years. There are exceptions to this with some lenders where depending LVR (Loan to Value Ratio) it is possible to obtain a term of up to 30 years. These longer terms are normally targeted at investors.

• If the mortgage is established using a variable rate and is not fixed or capped. Lump sum repayments may be made at any time.